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Double Your Profits in Two Years or Less

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The relationship between qualitative performance on values and quantitative performance on revenue and profit growth is not apparent to every company. But all the companies mentioned here know from experience that their commitment to values is directly connected to their bottom line performance. Raising performance on one value to the absolute maximum conceivable, as FedEx strives to do on the value of on-time delivery, is enough to double the profits of any company. The same result can be achieved by raising the performance on a wide range of physical, organizational and psychological values by just ten percent each. The rationale for these two apparently very different approaches is that it is simply not possible to raise performance to the top on any one value without raising it very significantly on a host of others on which it depends and with which it is interconnected. This was a core strategy we applied at the newspaper to raise the Titanic back to the surface and back to profitability.

B-corps

A recent trend in the USA is bringing to the fore the close relationship between values and business performance. Over the last five years 23 states have passed legislation legalizing a new category of ‘for-benefit’ corporations or B-corps. The rationale for the legislation is to protect the top management of these corporations from lawsuits filed by shareholder because management has consciously pursued core values, even when it may have resulted in lower short term profits. B-corps that declare their commitment to values such as community development, public service, environmental protection, education and other forms of social responsibility are legally entitled to do so, even if profits might suffer as a result. The irony is that all the available research supports the view that companies which place qualitative values above quantitative performance are significantly more profitable than those that pursue profits alone. Studies have shown that employee morale and retention and customer loyalty are far higher for companies which are perceived as committed to high values. The loyalty of customers at Apple is not just to the products they make. It is to the intangible values the company stands for. Although the for-benefit movement is still in an early stage, it is spreading rapidly. As an alternative to the traditional Fortune 500 listings, Game Changers 500 has introduced a new corporate index ranking corporations on their commitment to values.

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